Consumer price index at highest level for a year
Oil meeting disappoints after no output cut
German consumer confidence drops sharply
11.09am GMT
Over to Greece, and the task force set up by the European Commission had only mixed results in helping implement reforms.
That is the view of the European court of auditors. In a new report it said the task force, set up in 2011, focussed on reforming public administration in Greece, improving the tax system and helping a return to growth by improving the business environment. But it said:
Although the Task Force proved itself as a mechanism for delivering complex technical assistance, there were weaknesses in the design of some projects and only mixed results in terms of influence on the progress of reform,.
Technical assistance was delivered to the Greek authorities in accordance with the mandate, but it did not always advance the reforms sufficiently [although this] has to be seen in the context of the volatile political situation in Greece. The need for urgency meant that the Task Force was set up very rapidly, without a full analysis of other options or a dedicated budget. It had no single comprehensive strategic document for delivering assistance or for deciding priorities.
10.41am GMT
Back with UK inflation, and Chris Hare at Investec expect a gradual rise in inflation with a rate rise in November. But even if market turmoil causes the Bank of England to delay any increase, he cannot see it following others into negative rates:
We maintain our view that rises in inflation should be in store in the coming months, driven by (i) the effect of late-2014/early 2015 oil price falls “dropping out” of the annual inflation rate entirely (ii) a waning drag from falls in import prices, which have been pushed down by past strength in the pound (mitigated by a 7% in trade-weighted sterling fall since mid-November) (iii) further rises in wage growth, given strength in the labour market.
The prospective rise in inflation is only likely to be gradual, though. That is not least because the oil price has fallen by more than a third since last November. But more importantly for the medium term, wage growth remains stubbornly weak.
10.36am GMT
And here’s Reuters on what Iran might be thinking about oil output:
Rtrs snr srce "familiar with Iranian thinking" says Iran willing to discuss oil output freeze once production is back to pre-sanction levels
10.33am GMT
It appears oil prices and stock markets have once again raced ahead on hopes of a cut in crude production to help deal with the supply glut, only to be once again disappointed.
At least this time there was a meeting - unlike previous rumours which proved unfounded. But the suggestion of keeping output at January levels turned out not to be the message the market wanted.
Equity markets slipped from their highs to trade slightly negative. Indices exposed to commodities are giving up gains after several OPEC oil ministers agreed to freeze production at 11 Jan levels, which isn’t quite the ‘cut’ that oil bulls had been hoping for. Oh and it’s also contingent on other oil producing nations agreeing to the freeze, which Iran is unlikely to given has only just returned to the market after sanctions were lifted.
With Opec kingpin Saudi Arabia adding that it’s absolutely comfortable with current prices, it looks like yet another attempt to buoy the oil price with mere rhetoric. The problem is, we’re not fooled by that any more.
10.20am GMT
The poor German consumer confidence figures put the spotlight firmly on the European Central Bank again, and specifically, what it can do at its March meeting, says Carsten Brzeski at ING Bank.
On Monday ECB president Mario Draghi promised the bank would not hesitate to act, but Brzeski said:
Growth prospects for the German economy have taken a hit from latest market turbulences. At least this seems to be the main message of the just released ZEW index for the German economy. The index, which measures investors’ confidence, dropped to 1.0 in February, from 10.2 in January, and now stands at the lowest level since October 2014. At the same time, the current assessment component fell to 52.3, from 59.7 in January. Against the background of the latest market turmoil, this drop in investors’ sentiment is anything but a surprise. Tumbling stock markets, a stronger euro and more general concerns about the global growth outlook have clearly dented optimism about the German economy’s growth prospects.
With these disappointing sentiment data, market participants will look even closer at possible next steps by the ECB. The period in which more or less everyone tries to give the ECB advice on what to do at the next meeting should gradually come to an end. With the release of the January’s meeting minutes on Thursday, the discussion should start to move to what the ECB actually can and wants to deliver in March.
10.17am GMT
German consumer confidence slumped this month, according to the latest survey from the ZEW institute.
The economic sentiment index dropped from 10.2 in January to just 1 so far this month, albeit slightly better than the zero figure many economists had expected.
10.11am GMT
Inflation is unlikely to hit the Bank of England’s 2% target until well into 2017, says Howard Archer at IHS Global Insight:
The weakness in oil and commodity prices means that consumer price inflation will likely remain extremely low for longer. Furthermore, recent additional price cut initiatives announced by both Asda and Morrisons indicate that the supermarket pricing war is continuing.
Consumer price inflation will likely hover around 0.3% in the near-term, before gradually trending up in the second half of the year. It currently looks unlikely to get up to 1.0% until the fourth quarter of 2016. We expect inflation to then trend gradually higher to reach the Bank of England’s target rate of 2.0% late on in 2017.
10.09am GMT
Inflation is likely to remain low for some time, says Dennis de Jong, managing director at UFX.com:
After a year of inflation being glued very close to zero, it is now finally rising, although it will surely remain well below the 2% target for some time to come.
Many observers predicted that after the US raised interest rates it would just be a matter of months before Britain followed suit. However, global economic pressures have put paid to that and there are no signs of an imminent rate hike on this side of the pond.
10.04am GMT
Here’s our inflation story:
Inflation edged up to its highest rate for a year last month as rises in the price of alcohol and clothing pushed up the cost of living.
The consumer prices index (CPI) rose to 0.3% in January from 0.2% in December, according to the Office for National Statistics (ONS).
Related: UK inflation rises on dearer alcohol and clothes
10.00am GMT
House prices rose by 6.7% annually in December, according to figures also released by the ONS.
This compares to an increase of 7.7% in November. In 2015 overall prices rose by 7.9%, up from 5.1% the previous year.
9.56am GMT
Consumer price inflation rose to 0.3% year on year, but month on month it fell by 0.8%.
The month on month fall reflected the fall in air fares, as previously mentioned, as well as discounting in the post-Christmas sales.
9.49am GMT
And the contributions to the change in CPI:
9.45am GMT
Here’s a summary of the notable movements:
9.39am GMT
9.31am GMT
Breaking news: UK CPI rose by 0.3% in January year on year, in line with expectations and up from 0.2% in December. This is the highest annual rate since January 2015.
9.25am GMT
Qatar’s energy minister Mohammad bin Saleh al-Sada said the decision by his country, Saudia Arabia, Russia and Venezuela to freeze output at January’s levels depended on other major producers following suit.
A strategist at Petromatrix, Olivier Jakob, told Reuters:
It’s really the first supply management decision taken since November 2014 so even though there will be some that will try to discount it and say it’s not a cut, it’s a change. It’s a big change in policy.
9.18am GMT
The Opec news has hit the oil price, which had earlier jumped on hopes of a cut.
#Oil falls as Qatar/Russia/Saudi/Venezuela agree output freeze at Jan level, not cut; contingent on other producers pic.twitter.com/cWRq9xa46j
9.17am GMT
Saudi Arabia says there has been an agreement to freeze oil production at January levels, Reuters is reporting, in order to cope with the falling crude price.
The news comes after a meeting in Doha between Saudi Arabia’s oil minister Ali al-Naimi and his Russian, Qatari and Venezuelan counterpart.
QATAR ENERGY MINISTER SAYS AGREED OUTPUT FREEZE WITH SAUDI, RUSSIA AND VENEZUELA.
9.06am GMT
The pound is moving higher ahead of the UK inflation numbers.
It is a sad state of affairs that #GBP movements on the day of the CPI inflation numbers now makes us think leak! https://t.co/hnXV4ZFFHf
The Authority is deeply concerned about the impact that breaches (and apparent breaches) relating to the unauthorised, widespread sharing of statistics before their publication may have on the trustworthiness of the UK’s official statistics system.
8.54am GMT
Rational markets at work.
In 30 trading days so far this year oil has been +/- 5% or more in almost half of them pic.twitter.com/abOukUggWr
8.22am GMT
As expected, Europe has followed Asian markets with a positive start in early trading.
The FTSE 100 is up 54 points or 0.9%, while Germany’s Dax has opened 0.4% higher, France’s Cac has climbed 1% and Italy’s FTSE MIB is 0.8% better.
We are seeing yet more gains added on to the FTSE-100 in early trade as the bargain hunting continues. The fact that crude oil has broken back above $30/barrel however shouldn’t be ignored either – Saudi Arabia and Russia are scheduled to meet later today so there’s clearly hope of a deal being struck here, but the obvious flaw here has to be that any failure to progress the idea of production cuts between these two major players could see confidence in this rally undermined.
This cycling into risk-on investments has hit gold once again, with miner Randgold being pushed into negative territory, whilst Standard Chartered is also struggling after some negative broker comment [Investec has cut its recommendation from buy to hold].
8.14am GMT
The Bank of Japan’s surprise negative interest rate policy has come into effect today. Here’s the story:
Related: Bank of Japan launches negative interest rates
7.56am GMT
Here’s more on the oil producers’ meeting in Doha which is pushing crude prices higher:
Oil prices surged to their highest levels in more than a week as news of a meeting of top officials from the world’s biggest oil producers spurred speculation of an eventual deal to tackle a deep supply glut.
US crude rose by as much as $1.50, or 5.1%, to $30.94, the highest since 8 February, building on Friday’s gains of more than 12%.
Related: Oil prices rise on talk of output cut
7.48am GMT
Here’s the schedule of the key events:
7.42am GMT
The stock market rally of the past couple of days looks as if it is continuing, with positive moves in Asia and an opening rise predicted for European markets.
The Nikkei is up 0.2% while the Hang Seng has added just over 1%. In China the CSI300, which dipped back on Monday after its week long break, has climbed 3%.
Our European opening calls:$FTSE 5856 up 31
$DAX 9262 up 55
$CAC 4134 up 19$IBEX 8222 up 43$MIB 17086 up 44
We look for UK inflation to have picked up in January, despite recent news to the downside. We forecast CPI inflation of 0.5% year on year, up from 0.2% year on year in December, as a result of energy-related base effects.
Alongside this we see RPI inflation coming in at 1.4% year on year, up from 1.2% year on year (an index level of 258.8). Since last month’s forecast update a number of energy providers have cut household utility bills. This, along with the further dramatic moves to the downside in the oil price since the start of the year, means that our profile for CPI inflation has once again shifted down. We now see CPI inflation only getting to 0.9% year on year by the end of 2016, compared to a forecast of 1.2% year on year as recently as last month.
Today’s German ZEW economic expectations survey is likely to give us an insight into how the recent volatility has clobbered overall sentiment. Expectations are for a sharp decline from January’s 10.2 to 0, which would be the lowest reading since October 2014.
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